It was November 2003.
It had been below $30 most of the couple decades before that.
Posted on 12/19/2014 10:50:36 AM PST by thackney
There are numerous stories, on the internet, regarding the decline of oil prices. Everybody has an opinion or forecast, but unfortunately, they range from the eternal optimist to depths of the ultra deep (well ok the deepwater) drill rig.
The majority of these posts talk about the glut in recent months as supply overwhelms the demand. Mostly thanks to slumping economies around the world, especially the largest users of petroleum.
There is also significant chatter around the internet about Saudi Arabia (KSA) and their reluctance to curb production, which would help the price of oil go back up, to the chagrin of other OPEC members. (with the exception of the other Gulf Coast Countries) The supposed “strategy” by KSA is drive oil prices low, so US shale companies stop drilling and eventually end up folding, leading to KSA dominance again, in the global oil business.. The issue I see with this strategy is while there are certainly a number of companies financially leveraged that won’t make it through this downturn. There are a number of oil companies with strong balance sheets (i.e. Oxy, Chevron & ExxonMobil) that will be able to come in and pick off the firms on the cheap, relatively speaking. Subsequently, production will pick up, and a portion of the decline will be offset. I see this as “strengthening the herd”. As is life in the great outdoors, when animals get hungry and go for the kill, it’s usually the old and the sick that are killed and become dinner for the pursuer. You don’t have to be the fastest out there; you just can’t be the slowest!
While the KSA strategy above is what is being covered globally, I think there is a more discrete strategy at play. The Saudis are deceitful and cunning, but not stupid. I feel the Obama administration could actually contribute positively to an oil rebound. No it’s not more government involvement in our capital market, directly. KSA is big man on the block in the MENA region and wants to maintain their status. US companies becoming the largest oil producer has the potential to alter that, but what would definitely change their status? It’s Iran acquiring nuclear capabilities. With oil prices low and continued sanctions, Iran will have difficulty meeting their social-economic responsibilities. Russia’s support of Iran has been well documented. Russia will find it very difficult to continue supporting Iran in their nuclear quest. The falling Ruble, sanctions by Western countries (for their Ukraine invasion), combined with falling oil prices will put significant pressure on Putin.
How long will the low price of oil play out? The better question may be, how long can the people of Iran & Russia maintain civility before they create problems significant enough to change the direction of their leadership?
A number of “experts” proclaim the low oil prices are good for the US and other economies. I believe there’s an argument to the contrary. That’s a debate for another day.
If Iran has plans to nuke SA, they don’t need a far-reaching delivery system because all of Saudi’s oil facilities are on the Persian Gulf side.
BS as the writer neglects to address the economic advantage that the Kingdom of Saudi Arabia (KSA) has over US domestics. Comparing the ease of producing oil in Saudi Arabia versus fracking in the Bakken is like comparing putting a straw in the ground to get oil flowing versus blasting through basalt to get at it. The break-even cost of producing in the USA is many-fold more costly than producing in KSA.
Saudi Arabia could pretty much end new US domestic oil production by selling $3O oil into US markets. The last time $30 oil was seen in the US was in the 1980s. It can happen again, the Saudis can let it happen.
No it’s not more government involvement in our capital market, directly. KSA is big man on the block in the MENA region and wants to maintain their status. US companies becoming the largest oil producer has the potential to alter that, but what would definitely change their status? It’s Iran acquiring nuclear capabilities. With oil prices low and continued sanctions, Iran will have difficulty meeting their social-economic responsibilities. Russia’s support of Iran has been well documented. Russia will find it very difficult to continue supporting Iran in their nuclear quest.
Continued BS as the writer confuses cause and effect. The benefit of having Russia and Iran more disabled and less capable IS A CONSEQUENCE OF production decisions leading to lower oil prices. But the Saudis and their financial oil networks have been talking for years how to counter the fracking revolution. They have known for years they have the competitive economic advantage and therefore the power to curb new production by letting oil prices fall.
If the Saudis had wanted to cripple Iran or punish Russia, they could have long ago increased production and caused a price war on those producers. It was only earlier this year that domestic oil was flooding US refineries everywhere and WTI started to fall that prompted KSA to let worldwide prices fall by not cutting production.
Here's the reality from past years: Iran has had and still has formidable sanctions on its oil sales. It's been able to sneak oil to others and change ownership title names and Certificates of Origin but only in isolated cases. Compared to KSA production, Iran barely registers as a trickle although that can change as this administration continues to work towards lifting sanctions.
Russian oil supply is notoriously corrupt. There is no rule of law in Russia and in their producing regions. Contracts are meaningless to them. Oil buyers can on occasion get large discounts on Russian crude but most every purchaser has the attitude of "Show Me" meaning bring it to Rotterdam, let me see it and test it and then we'll talk. In sum, Russian crude supply is not consistent and not reliable. But black market discounts have made some rogue traders very wealthy.
Iraq has been largely controlled by the USA via JP Morgan Chase which is the force behind the Iraqi Central Bank. That is all changing but still pretty much in place. Iraqi oil is mostly presold and approved through its central bank as a proxy for JP Morgan.
Kurdistan wants to sell Kirkuk oil but is in a fight with Baghdad about who approves. There are pipelines from Kurdistan to Turkey and there are terrorist supplied truck lines to Iran and then to Turkey. The flow of oil to Iran and Turkey by truck is barely detectable and insignificant to influencing oil prices globally. Each truck can haul about 200 barrels (less usually) and a daily caravan of hundred trucks would make about 20,000 bbls daily. Compare this to the hauling capacity of a Suezmax Tanker carrying 1,000,000 bbls.
Venezuela is a basket case of corruption and risk.
Mexico, forgeddaboudit, you'll lose all your investment unless you have a few narco terrorist friends and then you could lose more than your money.
Nigeria, maximum corruption, rotten from top to bottom. The majors have their own loading terminals that they built on Bonny Island and lots and lots of security. And Nigeria has about half their oil wells under OPEC. There are opportunities for those that are not afraid of extreme high risk. Other parts of Africa such as Mozambique have oil but no infrastructure and no rule of law so investment dollars are at high risk.
The long and short is Saudi Arabia and their neighbors in United Arab Emirates (UAE) which serves as the oil hub for all the Middle East oil producers with Dubai as the Hong Kong of the Middle East are the go-to-guys for European and USA buyers. The emergence of significant US domestic production is the greatest threat to KSA and they have said so repeatedly over the years (http://cnsnews.com/news/article/michael-w-chapman/saudi-billionaire-prince-fracking-competitively-threatens-any-oil). Humbling and breaking Iran and Russia is a mere beneficial consequence of letting oil prices collapse. It is NOT the main factor in their decision making process.
The writer of this garbage either has his/her head up their ass or his/her news outlet has been paid by Saudi originated funds to spread a false narrative. And yes the Saudis do engage in propaganda. They own and control either directly or through surrogates a lot of media.
Let me give an idea of just how wealthy the Saudis are, all made possible by the USA and Europe. You know how Forbes Magazine is always publishing who are the top billionaires in the world? With Carlos Slim in Mexico as number 1 with about $70 Billion net worth? Complete utter BS. Prince Alwaleed of Saudi Arabia alone is worth $27 Trillion of which half is gold and growing. The entire Saudi Royal Family and financial network could pay their own deficits and that of their Arab neighbors for generations. Falling oil prices doesn't phase them in the least. But don't let anyone get in their way of losing market share to US domestics. That has already started to happen and that is why they are letting oil free fall.
Lastly, there is such an oil glut now in the USA that politicians are talking about allowing domestic oil to be exported. It is very possible in fact highly probably that Europeans would rush to place purchase orders for US crude and especially LNG. This would free them from Middle East influence and Russian influence. Saudis can't let that happen in their view.
Here’s a clickable link from the above post:
It was November 2003.
It had been below $30 most of the couple decades before that.
http://www.forbes.com/profile/prince-alwaleed-bin-talal-alsaud/
Real Time Net Worth
$21.6 Billion
As of 12/19/2014 @ 4:00PM
Mine was a typo. 1980s should have read 1990s.
By the time 2003 rolled around, the price was ascending and didn’t remain at 30 for very long.
The point is the Saudis are fully capable of dropping $30, $25, $20 oil into Houston. And they can do it for a decade no sweat.
Now maybe some are beginning to see why we need a floor at $35 to allow for our domestic producers to go up against the Saudis and survive.
I firmly believe the narrative of this article is approved by those in the Saudi camp to make everyone think it’s all about Iran and Russia. Garbage!
Saudis don’t want the world to think they are trying to demolish new production made possible by fracking. And I will bet that a lot of environmentalists are funded by groups that are taking it under the table from the Saudis because I know how those people are. And environmentalists are all out to stop fracking by any means possible. For example, Cuomo in New York.
BS, Forbes is BS. I know directly from persons that worked in the first ring of security in direct day-to-day moment-to-moment operations in the presence of Principals.
But go on and pull your news pieces off the internet and present them as Gospel.
I bet you believe everything you hear on CNN too, and probably MSNBC.
Then you were still incorrect. The price of oil (WIT @ Cushing) was $30 or below for 70% of 2000 through 2003.
The point is the Saudis are fully capable of dropping $30, $25, $20 oil into Houston. And they can do it for a decade no sweat.
We disagree, as do every report I've found. Do have anything to support a $20 for decade claim?
Now maybe some are beginning to see why we need a floor at $35 to allow for our domestic producers to go up against the Saudis and survive.
Nope. Made up claims do not support a bad idea.
Oh Yes, secret information not available to the rest of us.
In a round about way that’s what I meant. A free market will do both encourage production and consumption by finding the right price.
Look at the chart you pulled off the internet for 30 or 20 dollar oil in the 1990s. It’s all there.
And look at the link in post 23 for your answer. Does that disagree with “every report you’ve found”?
> “We disagree, as do every report I’ve found.”
You don’t know much do you? You only know what internet reports feed you. I’ll bet you believe CNBC and CNN Money too.
Here’s the post 23 link:
Read it and tell us how it plays with the garbage you pull off the internet.
Oh and BTW, that report Alwaleed in the link above, it was in numerous news outlets and on Euro Television. He got angry and made a mistake by showing his emotion and his real thinking. That can be fatal in the world of high stakes trade.
Now read the above link and tell your thoughts here.
That’s right, it’s not available to you and most everyone.
But go on and pull garbage off the internet. That’s a real service! Not!
I agree is was that low in the 1990s as well. But your statement was the last time.
No questions it was below $30 for most of decades before that.
And look at the link in post 23 for your answer. Does that disagree with “every report you’ve found”?
Nope. It gives no basis to the claim $20 for a decade. No support at all for the numbers you made up.
You don’t know much do you?
Didn't take you long to go back to personal attacks did it? Can we stay with the topic instead?
Now read the above link and tell your thoughts here.
Why don't you cite the words in the article that you think support the claim of $20 for a decade. I find nothing in there. It doesn't even mention a price of oil or a time period for a dip in the article.
And look at the link in post 23 for your answer. Does that disagree with “every report you’ve found”?
> “Nope. It gives no basis to the claim $20 for a decade. No support at all for the numbers you made up.”
The link shows clearly that the Saudis are afraid of US Oil Production which demolishes the garbage article you posted.
As far as the number “20”, you’re splitting hairs trying to make a frivolous point. The number could be 30, 25, 20, 19, 23, 31 etc. But of course your schtik is to divert attention to frivolous matters when you’ve called on the carpet about much bigger matters.
Now read it again and compare it with your Rippelmeyer garbage:
Or $80 or $100. You claim has no basis. You made it, can you not support it?
Now read it again
I read it a second time. Not surprising, the words and information did not change.
Why don't you cite the words in the article that you think support the claim of $20 for a decade? Or what ever number you now want to claim.
> “Why don’t you cite the words in the article that you think support the claim of $20 for a decade?”
The chart you posted in Post 24 has oil prices fluctuating between $12 and $25 between 1990 and 2000. The Saudis controlled the market then and they largely control it now.
Their cost of getting oil out of the ground and their huge cash hoards around the world make them capable of repeating what happened between 1990 and 2000.
What is your reading problem?
Ok I get it. You’re not interested in any views that conflict with your own or of the garbage you pull off the internet.
This linked article:
discusses the real fear the Saudis have and not the false narrative of this garbage article that you posted.
Here is the money quote made in January of this year 2014:
***Saudi Arabia’s Prince Alwaleed Bin Talal, a billionaire businessman and nephew of Saudi King Abdullah, said the production of shale oil and natural gas in the United States and other countries, primarily done through fracking, is a real competitive threat to “any oil-producing country in the world,” adding that Saudi Arabia must address the issue because it is a “matter of survival.”***
The percentage oil production by OPEC compared to the global market didn't waver by a couple percentage points from those cheap prices to the >$140 prices of 2008.
This linked article:
We have had link posted several times.
***Saudi Arabia’s Prince Alwaleed Bin Talal, a billionaire businessman and nephew of Saudi King Abdullah, said the production of shale oil and natural gas in the United States and other countries, primarily done through fracking, is a real competitive threat to “any oil-producing country in the world,” adding that Saudi Arabia must address the issue because it is a “matter of survival.”***
Thank you for posting what you believe supports you claim. I see nothing to support in 2015 and beyond, that translates to $20 for a decade.
You might want to consider the difference between a 1995's $20 and a 2020's $20.
You might also consider today all of OPEC has a little over 2 MMBPD surplus capacity and what global demand would do at a decade of $20. And the challenges of growing demand while operating at a large deficit for a decade. You might also consider the cost to find and produce the next barrel of oil in 2015 is quite different after the world has consumed ~620 billion barrels since that time period.
> “The percentage oil production by OPEC compared to the global market didn’t waver by a couple percentage points from those cheap prices to the >$140 prices of 2008.”
Well as you are so fixated on nitpicking, I guess I can my own little nitpick.
It wasn’t 2008 that oil peaked to 140. And it wasn’t 140 either.
It was July 2007 when it peaked and it peaked at 145.
Don’t you just love how this nitpick garbage enriches a thread on Saudi intentions? I bet you do!
There’s a bunch more where you are lacking knowledge in the post you just made. But you’re done. There is nothing useful to come from this discussion and the only thing that is useful is the article linked to what Prince Alwaleed said about fracking in the USA.
***Saudi Arabia’s Prince Alwaleed Bin Talal, a billionaire businessman and nephew of Saudi King Abdullah, said the production of shale oil and natural gas in the United States and other countries, primarily done through fracking, is a real competitive threat to “any oil-producing country in the world,” adding that Saudi Arabia must address the issue because it is a “matter of survival.”***
Why do you spar with an unarmed opponent? I realize there is gratification in teaching the ignorant an enlightening them but you gotta have some raw material to work with.
This guy would argue with a fence post over which side of it the sun would come up. To learn anything you have to at least suspect you need to.
I did not say peak. It was 2008. In 2007, the crude oil price never closed above $100.
There’s a bunch more where you are lacking knowledge in the post you just made.
Let me know when you actually find something incorrect, rather than just remembering data wrong, or reading words I did not say.
There is nothing useful to come from this discussion
Entertaining, yes.
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